USA/Canada: (800) 454-9572 Int'l: (310) 859-9572
Cannon Trading Co. Inc. Since 1988
Cannon Trading Co. Inc. Since 1988
Cannon Trading Co. Inc. Since 1988
9301 Wilshire Blvd., Suite 515
Beverly Hills, CA 90210
Tel: (800) 454-9572 or (310) 859-9572
Fax: (310) 859-0547
Email:
← back to Currency Futures Information
If you are new to futures this section is for you. The history of modern futures trading is traced to the grain trade in the Midwest U.S. in the 1800s. Grain merchants developed the first formal marketplace in 1848 in Chicago. These merchants were looking for a system to standardize trading transactions. While forward contracts were initially utilized, these privately negotiated agreements were not standardized and sometimes counterparties defaulted. In an effort to improve the reliability of the system, futures contracts were developed, which were standardized for quality, quantity, and time and place for delivery of the agricultural products that were being traded.
Chicago Mercantile Exchange® (CME) pioneered the first currency futures contracts in 1972. In March 2003, the total notional value of FX trading at CME was U.S. $347.5 billion. Currency futures are derivatives on the interbank cash and forward exchange rates.
A futures contract is a legally binding contract to buy or sell a commodity or financial instrument at a certain price at a specified date in the future. Futures markets thrive because they attract two types of traders: hedgers and speculators. Hedgers, such as producers and processors of commodity products, seek to protect against adverse changes in the underlying cash price that may impact their business. Speculators include investors and traders who want to profit from price changes. Speculators accept the price risks and rewards that hedgers wish to avoid. Futures markets provide the forum in which speculators can buy or sell contracts quickly and — just as quickly — exit their positions to react to market changes.
At CME, a U.S. government-regulated marketplace, currency futures trade via “open outcry” on the CME trading floor and on CME's electronic trading platform. These CME FX markets are integrated by floor traders via wireless e-trading to provide customers with efficient, fluid access to both pricing pools.
CME benefits foreign exchange participants, including individual investors, large banks, hedge funds and multinational corporations. All of these players come together at CME to speculate and hedge on currency market fluctuations.
CME delivers efficient, transparent trading venues for rapid FX trade execution supported and monitored by experienced industry professionals. CME FX customers access liquid markets, efficient clearing services, and 24-hour-a-day customer support. Futures commission merchants facilitate customer trading at CME in exchange for brokerage fees.
Most currency contracts at CME are traded on the March quarterly cycle and go through a physical delivery process four times a year on the third Wednesday of March, June, September and December. However, the Mexican peso and the South African rand are traded on all 12 calendar months. There are two “cash-settled” contracts — the Brazilian real, traded on all twelve calendar months, and the Russian ruble, traded on the March quarterly cycle.
SOURCE: CME® (Chicago Mercantile Exchange®) publications: "How FX Futures Work." These publications are available in full upon request.
CME does not offer or provide any investment advice or opinion regarding the nature, potential, value, suitability or profitability of any product or investment strategy. All matters pertaining to rules and specifications for CME products are made subject to and are superseded by official CME rules. Current CME rules should be consulted in all cases concerning contract specifications.
Chicago Mercantile Exchange® and CME® are trademarks of Chicago Mercantile Exchange Inc. All other trademarks are the property of their respective owners.
